Contents of this issue:

Detroit Bankruptcy May Impact School Bonds

DETROIT – The city of Detroit filed for bankruptcy last Thursday, according to The Wall Street Journal. The Journal reports that the city’s general-obligation bonds dropped value, though general-obligation bonds are typically considered a relatively safe bet.

According to The Journal, some investors are concerned that Detroit could accelerate the selloff in the municipal bond market. Other Michigan government officials told The Journal that they might have to pay higher rates to sell bonds.

“Michigan has been touted for years as one of the most bond-friendly states out there,” Robert Miller, senior portfolio manager at Wells Capital Management, told the Journal. “That reputation is shot.”

Many Skeptical of School Consolidation

GARDEN CITY, Mich. – Several school officials are skeptical of State Superintendent Mike Flanagan’s proposal to require certain non-instructional services be consolidated at the regional level, according to the Observer & Eccentric.

Livonia Public Schools Superintendent Randy Liepa said that consolidation of services would impact collective bargaining agreements and district budget priorities, among other things. Liepa said that consolidation of services has already happened – where it makes sense. “Where it is feasible, it is being done or should be considered,” he told the Observer & Eccentric.

Paul Salah, deputy superintendent for instruction at Wayne-Westland, told the Observer & Eccentric that he thinks estimates of savings associated with service consolidation are premature.

Buena Vista, Inkster School Districts to be Dissolved

LANSING, Mich. – The Buena Vista and Inkster school districts missed a state deadline on Monday and will be dissolved, according to the Detroit Free Press. The Free Press reports that Buena Vista and Inkster will be the first Michigan school districts dissolved under a new law passed for districts with severe financial mismanagement.

According to the Free Press, Buena Vista and Inkster students will be reassigned to other nearby public schools. Though the districts will be dissolved, their millages will remain so that each district's debt can be repaid, according to the Free Press.

DPS Gets New Emergency Manager

DETROIT – Jack Martin has replaced Roy Roberts as emergency manager of Detroit Public Schools, according to The Detroit News. According to The News, however, there is some disagreement over how long an emergency manager has tenure over the district.

According to The News, Public Act 436 says that an emergency manager has 18 months to work before government officials can attempt to remove him. The News reports that Gov. Rick Snyder’s office has interpreted the law to mean that an emergency manager’s tenure begins when he takes office – instead of when the first emergency manager is put in place.

According to The News, the first interpretation would mean that the DPS school board could attempt to remove the emergency manager in September 2014. The second interpretation, The News reports, would mean that the clock would reset whenever a new emergency manager is appointed.

Doug Bernstein, a bankruptcy expert, told The News that he agreed with the governor’s interpretation. “The way to get out from under the financial emergency is to solve the problem, which is really what the goal is,” he said. “I don’t know how you can’t restart the clock, that would really hamstring someone coming in.”

House Panel Questions Common Core

LANSING, Mich. – State Superintendent Mike Flanagan testified before a house panel in support of implementing the Common Core State Standards, according to The Detroit News.

The News reports that funding for implementation of Common Core was blocked last month. Flanagan said that an enormous amount of money has already been spent since 2010 to implement Common Core, according to The News. If Common Core continues to be implemented, the MEAP test would be replaced with an online “Smarter Balanced” test.

If Common Core is not implemented, the state will have to adopt another education standard, and Michigan will have to create college and career readiness standards, The News reports.

Rep. Tom McMillin, R-Auburn Hills, is one of the chief critics of Common Core, and said that it will impact other aspects of public education, according to The News. “They will decide curriculum. You teach to the test…that’s what happens,” he said, The News reports.

SOURCE: The Detroit News, “Michigan school chief defends Common Core before House panel” July 16, 2013 FURTHER READING: Mackinac Center for Public Policy, “A ‘Common’ Debate: Common Core Curriculum Standards Are Promising But Dangerous,” June 3, 2013